Nov 2004 - Dragon Mining

Dragon are currently completing construction of their first gold mine in Scandinavia, being their 80% owned Svartliden in northern Sweden commencing in the December Quarter 2004 at an expected production rate of 65,000oz to 70,000oz and cash cost of ~US$190/oz in the first year of the project, based on treating 300,000t at 7.2g/t. Production has been estimated to average 55,000ozpa at cash costs of ~US$230/oz over the mine’s current 5-year life.

This is expected to be followed by the wholly owned Vammala operational centre (comprised of Orivesi and Jokisivu) in SW Finland. Exploration is currently extending the reserves and resources at Orivesi, while delineating the extent of Jokisivu for a decision to mine to be made in December 2004. Should the expected approval be given, then production at 60,000ozpa to 80,000ozpa could commence perhaps as early as July 2005 at cash costs of ~US$210/oz.

Pampalo in SE Finland could become the third operation for Dragon possibly from mid-2007 at production of 40,000ozpa to 50,000ozpa or so. Resources of almost 200,000oz (0.9mt at 6.9g/t) have been established, and deepening of the decline and establishment of the drill positions for deeper extensions has commenced. There are a number of smaller resources amongst nearby possible satellite operations.

Our 5%NPV for Dragon is A$0.30 per share based only on the above 3 potential operations and not giving any credit for the number of other, mainly Finnish, exploration properties that could also become operations. It should be noted that the mine lives should be longer, and our modelled grades could easily be more than 10% higher (each 10% increase in realised grades currently adds A$0.09 to the NPV)